Avoiding the Iceberg and Maintaining Organizational Health

Transcription

1 Avoiding the Iceberg and Maintaining Organizational Health October 5, 2017 BDO USA, LLP, a Delaware limited liability partnership, is BDO KNOWLEDGE Webinar Series the U.S. member of BDO International Limited, a UK Implementation Issues Related to ASU Financial Statements of Not-for-Profit Entities company limited by guarantee, and forms part of the Page 1 international BDO network of independent member firms.

2 Avoiding the ICEBERG! BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

3 Presenter Paul Jan Zdunek, MBA Managing Director, Nonprofit and Education Advisory Services, BDO 15+ Years Nonprofit & Corporate Turnaround Experience Chief Restructuring Officer, Business Transformation Advisor, and Interim Executive Conflict & Crisis Management, Financial and Organizational Restructuring, Cost Reduction and Rightsizing of Organizations, Strategic Business and Sales Planning, Leadership Development, and Stakeholder Management Conductor to Chief Executive Officer: connecting the dots (data) 3

4 Session Overview How Healthy is Your Organization? What Are the Signs of a Looming Crisis? What Can You Do Instead? Real Life Case Studies Q&A 4

5 $ $ Shareholders 5 5

6 Page 6 Only 10% of an ICEBERG can be seen above the surface

7 ORDER will eventually lead to CHAOS if not constantly monitored 7

8 Company Clock HEALTHY CROSSROADS CONFLICT CRISIS 8

9 Usual Victims Crisis MONEY GOALS FOCUS 9

10 Usual Suspects Crisis CASH FLOW CONFLICT LEADERSHIP VACUUM 10

11 11 Human Challenges = 85%

12 Determining Whether Your Organization is Healthy or Needs Stabilization Is the Organization Fiscally Strong? Is the Organization well-run with Good Management? Does the Organization have strong Governance and Oversight? Is the Organization capable of Responding to Change? Does the Organization have a history of periodically Recreating Itself? 12

13 Where Is YOUR Organization on the Company Clock? In a HEALTHY state? At a CROSSROADS? In the middle of CONFLICT? Deep in CRISIS? 13

14 Company Clock HEALTHY YES!!! to All Questions Fiscally Strong Good Management Strong Governance & Oversight Responds to Change Recreates Itself 14

15 Company Clock CROSSROADS Common Symptoms Leadership Denial They have nothing to do with the problem Yes, but Leadership Fear Acknowledging problem might result in loss of prestige or position Leadership Ignorance Information systems do not alert them to a problem until it s too late or at all Leadership Absence Leaves running of the business to others hands off the steering wheel 15

16 Membership Service Organization Crossroads SYNOPSIS The oldest and most prestigious nonprofit organization in its region, this 87 yearold Membership Service Organization was stuck in a failing financial growth model. The incoming President of the Board of Directors determined that a new plan was necessary to revitalize the organization. 16

17 Membership Service Organization Crossroads PROBLEMS The Membership Service Organization had been facing a completely disengaged Board of Directors, flat sales, and declining philanthropic revenue for the last five years which threatened the organization s future viability. Conflicts regarding the future direction and strategies to improve it were developing between newer and long-term Board Members. Collectively, they lacked the skills and experience to develop a new plan. 17

18 Membership Service Organization Crossroads SOLUTIONS BDO facilitated its Reboot Retreat TM to build a roadmap that defined and aligned the organization s goals and strategies through a detailed and organized effort that analyzed, debated and reframed the fundamental issues that were driving the organization s failures. Through a 360 o Socratic approach, the organization s Leadership was able to identify issues and come to unanimous agreement. 18

19 Membership Service Organization Crossroads SOLUTIONS Through the Reboot Retreat TM process, the Leadership realized there were four foundational drivers for success at this time in the organization s life cycle: Quality of Product Delivery of Product Policy Development including SOPs Philanthropic Development 19

20 Membership Service Organization Crossroads RESULTS The Board of Directors and Executive Leadership are completely aligned with their new goals and strategic action steps Changes to improving the quality and delivery of product as well as philanthropic development: Increased revenues by 65% Dramatically improved the quality of the experience for members 20

21 Company Clock CONFLICT Common Symptoms Lack of Financial Knowledge P&L and Balance Sheet tell a story Losing Money Cash Flow Taking Personnel For Granted Needs of Employees important to address: stress working environment Leadership Isolation Not interested in hearing negative information - won t acknowledge the facts even though Rome is Burning Problems between Management and Board of Directors Lack of Planning No plan to deal with contingencies when problems occur, not enough time or resources to deal with them 21

22 Arts Center Conflict SYNOPSIS A nationally recognized, award-winning Arts Center, which lost its key leadership and its ability to sustain itself, was at risk and required professional interim CRO (Chief Restructuring Officer) leadership to stabilize and revitalize the organization 22

23 Arts Center Conflict PROBLEMS The organization lacked a clear vision, plans and strategies resulting in flat revenues for over five years. The Board was frustrated with Management s performance and was extremely concerned about the organization s future. Additionally, the Board urgently needed to find expert interim leadership in the transition to permanent leadership. 23

24 Arts Center Conflict SOLUTIONS Interim leadership CRO conducted a full organizational assessment: reviewing governing documents, financials, mission statement & core values, staffing structure, board governance and fiduciary engagement, as well as branding, sales and differentiators. This assessment generated breakthrough ideas to increase revenues, improve operational and financial performance, identify changes to Board governance, and develop strategies to attract new leadership. 24

25 Arts Center Conflict SOLUTIONS Restructured the staffing matrix, rewriting all job descriptions and resetting compensation levels Designed the Arts Center s first-ever Fundraising & Cultivation Roadmap Created the Arts Center s first-ever Sales & Marketing Roadmap Led and managed a time-sensitive Executive Search process 25

26 Arts Center Conflict RESULTS Employee performance and morale improved exponentially 55% increased revenues within the first year New Chief Executive hired in 8 weeks Organization viable now and able to return to its core mission 26

27 Company Clock CRISIS Common Symptoms Immediate Needs Cash Bank/Lender Default Time Resources Personnel Time is Running Out Must move at a pace 30x faster than in the HEALTHY zone 27

28 International Boutique Hotel Crisis SYNOPSIS An International Boutique Hotel opened its first location in the US. Hailed to be the solution for Asian tourists visiting the US as well as well-traveled guests looking for something out of the ordinary, the hotel was in jeopardy of closing within three months of its grand opening. Crisis had ensued. 28

29 International Boutique Hotel Crisis PROBLEMS The Hotel was losing 10% of its annual operating budget each month It was unable to achieve the necessary 80% occupancy levels There were major conflicts and a loss of confidence between Ownership and Executive Management 29

30 International Boutique Hotel Crisis SOLUTIONS Provided interim management leadership Replaced Executive Management Team Designed Global Sales & Marketing Plan Forged a strong relationship with Ownership and New Executive Management built on competence and trust 30

31 International Boutique Hotel Crisis RESULTS Achieved profitability in 90 days Occupancy went from 17% to 80% in one year Operating budget doubled in first year with a net profit 31

32 Where Is YOUR Organization on the Company Clock? In a HEALTHY state? At a CROSSROADS? In the middle of CONFLICT? Deep in CRISIS? 32

33 Avoiding the ICEBERG Key Components 33

34 Key Components to Avoiding the Iceberg DATA: Company s historical and current financial and operating metrics used to assess performance PLANNING: Alignment with future goals, strategies and initiatives. Leadership s use of planning tools to: forecast and monitor performance, manage cash flow, analyze outcomes and adjust! GROWTH: Company s readiness for short-term and long-term growth in revenues SUSTAINABILITY: Company s stability and sophistication with respect to board leadership, executive management, operations, organization, systems and technology, sales, market differentiators 34

35 Key Components to Avoiding the Iceberg COMPETITIVE POSITION: Company s differentiators and competitive advantages, such as its distinctive offerings, intellectual property, branding, strategic relationships, pricing, location, customer base, etc. PERFORMANCE IMPROVEMENTS: Company s initiatives and vision to improve sales, profitability, cash flow, customer base, etc. RISK MITIGATION: Company s awareness of key potential risks, such as internal controls, insurance, litigation, union disputes, customer demographics, program relevance, etc. 35

36 Key Findings 8 out of 10 Organizations in the United States Fail The 20% that exhibits long-term Health concentrates on three interactive DRIVERS that are examined and updated continuously while the other 80% does not 36

37 Key Findings DRIVER No. 1 DATA-DRIVEN DECISION MAKING Financials Actual to Goal Sales Reports Compare to Past Performance Stakeholder Feedback What Do They Want DRIVER No. 2 PLANNING Strategic Meetings & Retreats Take the Time to Plan Worst-Case Scenario Planning DRIVER No. 3 - MONITORING Manage to Data-Driven Strategies and Goals Hold People Accountable for their areas of Responsibility & Authority Addressing Areas of Deficiency or Abundance - Adjust 37

38 Organizations + People Solutions Approach COMPLEX HOLISTIC 38

39 Company Clock HEALTHY Holistic Components for Success Fiscally Strong Good Management Strong Governance & Oversight Responds to Change Recreates Itself AND Mission & Core Values - Alignment Case for Support Compelling Differentiation Why Your Organization vs.? 39

40 DON T LET LACK OF MONEY TIME STAFFING ETC BE AN EXCUSE 40

41 41 DON T WAIT UNTIL YOU ARE FACING A CRISIS TO MAKE CHANGES

42 MISSION-DRIVEN + DATA-DRIVEN DECISIONS = MAXIMUM RESULTS 42

43 Thank You! Questions? 43

44 Paul Jan Zdunek, MBA Managing Director Nonprofit & Education Advisory Services O: (310) C: (626)